8/31/2010

The number of "problem banks" keeps climbing

The government's list of troubled banks hit its highest level since 1993 during the second quarter, although the pace of growth continued to slow, according to a government report released Tuesday.

The number of banks at risk of failing rose by 53 to 829, the Federal Deposit Insurance Corp. said in its quarterly survey of the nation's banking system. That increase marks the smallest rise since the first quarter of 2009.

However, it's still nearly double the 416 banks that were on the FDIC's watch list a year ago and is up from 775 in the first quarter of this year.

Banks that end up on the problem list are considered the most likely to fail. But few of the lenders on the list actually reach the point of failure. On average, just 13% of banks on the FDIC's problem list have been seized and shuttered by regulators.

So far this year, 118 banks have failed, with 45 closings during the last quarter.

While FDIC chief Sheila Bair said she expects 2010 bank failures to exceed last year's tally of 140, the total amount of assets from this year's failures will likely be lower since banks have been cleaning up their balance sheets. . . .